Did hospitals respond to changes in weights of Diagnosis Related Groups in Norway between 2006 and 2013?

Impact of health benefit package policy interventions on service utilisation under government-funded health insurance in Punjab, India: analysis of Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY)

Background

The design of health benefits package (HBP), and its associated payment and pricing system, is central to the performance of government-funded health insurance programmes. We evaluated the impact of revision in HBP within India's Pradhan Mantri Jan Arogya Yojana (PM-JAY) on provider behaviour, manifesting in terms of utilisation of services.

Methods

We analysed the data on 1.35 million hospitalisation claims submitted by all the 886 (222 government and 664 private) empanelled hospitals in state of Punjab, from August 2019 to December 2022, to assess the change in utilisation from HBP 1.0 to HBP 2.0. The packages were stratified based on the nature of revision introduced in HBP 2.0, i.e., change in nomenclature, construct, price, or a combination of these. Data from National Health System Cost Database on cost of each of the packages was used to determine the cost-price differential for each package during HBP 1.0 and 2.0 respectively. A dose-response relationship was also evaluated, based on the multiplicity of revision type undertaken, or based on extent of price correction done. Change in the number of monthly claims, and the number of monthly claims per package was computed for each package category using an appropriate seasonal autoregressive integrated moving average (SARIMA) time series model.

Findings

Overall, we found that the HBP revision led to a positive impact on utilisation of services. While changes in HBP nomenclature and construct had a positive effect, incorporating price corrections further accentuated the impact. The pricing reforms highly impacted those packages which were originally significantly under-priced. However, we did not find statistically significant dose-response relationship based on extent of price correction. Thirdly, the overall impact of HBP revision was similar in public and private hospitals.

Interpretation

Our paper demonstrates the significant positive impact of PM-JAY HBP revisions on utilisation. HBP revisions need to be undertaken with the anticipation of its long-term intended effects.

Funding

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).

The end of an era? Activity-based funding based on diagnosis-related groups: A review of payment reforms in the inpatient sector in 10 high-income countries

CONTEXT

Across the member countries of the Organisation for Economic Co-Operation and Development, policy makers are searching for new ways to pay hospitals for inpatient care to move from volume to value. This paper offers an overview of the latest reforms and their evidence to date.

METHODS

We reviewed reforms to DRG payment systems in 10 high-income countries: Australia, Austria, Canada (Ontario), Denmark, France, Germany, Norway, Poland, the United Kingdom (England), and the United States.

FINDINGS

We identified four reform trends among the observed countries, them being (1) reductions in the overall share of inpatient payments based on DRGs, (2) add-on payments for rural hospitals or their exclusion from the DRG system, (3) episode-based payments, which use one joint price to pay providers for all services delivered along a patient pathway, and (4) financial incentives to shift the delivery of care to less costly settings. Some countries have combined some or all of these measures with financial adjustments for quality of care. These reforms demonstrate a shift away from activity and efficiency towards a diversified set of targets, and mirror efforts to slow the rise in health expenditures while improving quality of care. Where evaluations are available, the evidence indicates mixed success in improving quality of care and reducing costs and expenditures.

Evaluation of inpatient services of tertiary comprehensive hospitals based on DRG payment

Objective

This study aims to evaluate inpatient services in 49 tertiary comprehensive hospitals using indicators from the diagnosis related groups (DRG) payment system.

Method

DRG data from 49 tertiary comprehensive hospitals were obtained from the quality monitoring platform for provincial hospitals, and relevant indicators were identified. The analytic hierarchy process (AHP) was used to compute the weight of each indicator. The rank sum ratio method was used to calculate the weight rank sum ratio (WRSR) value and the corresponding probit value of each hospital. The hospitals were divided into four grades based on the threshold value: excellent, good, fair, and poor.

Results

Eight indicators of the 49 hospitals were scored, and the hospital rankings of indicators varied. The No. 1 hospital ranked first in the indicators of "total number of DRG", "number of groups", and "proportion of relative weights (RW) ≥ 2". The WRSR value of the No.1 hospital was the largest (0.574), and the WRSR value of the No. 44 hospital was the smallest (0.139). The linear regression equation was established: WRSRpredicted =-0.141+0.088*Probit, and the regression model was well-fitted (F = 2066.672, p < 0.001). The cut-off values of the three WRSRspredicted by the four levels were 0.167, 0.299, and 0.431, respectively. The 49 hospitals were divided into four groups: excellent (4), good (21), average (21), and poor (3). There were significant differences in the average WRSR values of four categories of hospitals (p < 0.05).

Conclusion

There were notable variances in the levels of inpatient services among 49 tertiary comprehensive hospitals, and hospitals of the same category also showed different service levels. The evaluation results contribute to the health administrative department and the hospital to optimize the allocation of resources, improve the DRG payment system, and enhance the quality and efficiency of inpatient services.

Do budget constraints limit access to health care? Evidence from PCI treatments in Hungary

Under Hungary's single payer health care system, hospitals face an annual budget cap on most of their diagnoses-related group based reimbursements. In July 2012, percutaneous coronary intervention (PCI) treatments of acute myocardial infarction were exempted from that hospital level budget cap. We use countrywide individual-level patient data from 2009 to 2015 to map the effect of such a quasi-experimental change in monetary incentives on health provider decisions and health outcomes. We find that direct admissions into PCI-capable hospitals increase, especially in central Hungary, where there are several hospitals which can compete for patients. The proportion of PCI treatments at PCI-capable hospitals, however, does not increase, and neither does the number of patient transfers from non-PCI hospitals to PCI-capable ones. We conclude that only patient pathways, plausibly influenced by hospital management, were affected by the shift in incentives, while physicians' treatment decisions were not. While average length of stay decreased, we do not find any effect on 30-day readmissions or in-hospital mortality.

Predicting diagnostic coding in hospitals: individual level effects of price incentives

The purpose of this paper is to test if implicit price incentives influence the diagnostic coding of hospital discharges. We estimate if the probability of being coded as a complicated patient was related to a specific price incentive. This paper tests empirically if upcoding can be linked to shifts in patient composition through proxy measures such as age composition, length of stay, readmission rates, mortality- and morbidity of patients. Data about inpatient episodes in Norway in all specialized hospitals in the years 1999-2012 were collected, N = 11 065 330. We examined incentives present in part of the hospital funding system. First, we analyse trends in the proxy measures of diagnostic upcoding: can hospital behavioural changes be seen over time with regards to age composition, readmission rates, length of stay, comorbidity and mortality? Secondly, we examine specific patient groups to see if variations in the price incentive are related to probability of being coded as complicated. In the first years (1999-2003) there was an observed increase in the share of episodes coded as complicated, while the level has become more stable in the years 2004-2012. The analysis showed some indications of upcoding. However, we found no evidence of widespread upcoding fuelled by implicit price incentive, as other issues such as patient characteristics seem to be more important than the price differences. This study adds to previous research by testing individual level predictions. The added value of such analysis is to have better case mix control. We observe the presence of price effects even at individual level.

The pilot of a new patient classification-based payment system in China: The impact on costs, length of stay and quality

With the urgent need to regulate provider behaviors, China developed a novel patient classification with global budget payment system, expecting to achieve both easy implementation and cost containment. The new system, called "diagnosis-intervention packet (DIP)" payment, is based on a deterministic patient classification approach, which groups patients according to the combination of principal diagnosis ICD-10 (International Classification of Diseases, 10th Revision) codes and procedure ICD-9-CM3 (International Classification of Diseases, 9th Revision, Clinical Modification) codes and links each group to relative historical costs market-wide. This study investigated the impact of the DIP-based payment on inpatient costs, length of stay, and quality of care in the largest DIP pilot city of China. In 2018, the city changed from the "fixed rate per admission with a cap on annual total compensation" policy to DIP with global budget for all insured inpatients. A difference-in-differences approach was employed to identify changes in outcome variables before and after the DIP policy among insured relative to uninsured patients. We found an average of 8.5% (p = 0.000) increase in inpatient costs per case (as intended), trivial changes in length of stay, and a 3.6% (p = 0.046) reduction in postoperative complication rate in response to DIP adoption among patients with high severity. Our findings suggested that the DIP-based payment helped regulate provider behaviors when treating high-risk patients. And the new payment has the potential for rapid rollout in resource-limited areas where lack a uniform coding practice or high-quality historical data.

Effectiveness of hospital payment reforms in low- and middle-income countries: a systematic review

Payment mechanisms have attracted substantial research interest because of their consequent effect on care outcomes, including treatment costs, admission and readmission rates and patient satisfaction. Those mechanisms create the incentive environment within which health workers operate and can influence provider behaviour in ways that can facilitate achievement of national health policy goals. This systematic review aims to understand the effects of changes in hospital payment mechanisms introduced in low- and middle-income countries (LMICs) on hospital- and patient-level outcomes. A standardised search of seven databases and a manual search of the grey literature and reference lists of existing reviews were performed to identify relevant articles published between January 2000 and July 2019. We included original studies focused on hospital payment reforms and their effect on hospital and patient outcomes in LMICs. Narrative descriptions or studies focusing only on provider payments or primary care settings were excluded. The authors used the Risk of Bias in Non-Randomized Studies of Interventions tool to assess the risk of bias and quality. Results were synthesized in a narrative description due to methodological heterogeneity. A total of 24 articles from seven middle-income countries were included, the majority of which are from Asia. In most cases, hospital payment reforms included shifts from passive (fee-for-service) to active payment models-the most common being diagnosis-related group payments, capitation and global budget. In general, hospital payment reforms were associated with decreases in hospital expenditures, out-of-pocket payments, length of hospital stay and readmission rates. The majority of the articles scored low on quality due to weak study design. A shift from passive to active hospital payment methods in LMICs has been associated with lower hospital and patient costs as well as increased efficiency without any apparent compromise on quality. However, there is an important need for high-quality studies in this area.

Hospital reimbursement and capacity constraints: Evidence from orthopedic surgeries

Health care providers' response to payment incentives may have consequences for both fiscal spending and patient health. This paper studies the effects of a change in the payment scheme for hospitals in Norway. In 2010, payments for patients discharged on the day of admission were substantially decreased, while payments for stays lasting longer than one day were increased. This gave hospitals incentives to shift patients from one-day stays to two-day stays, or to decrease the admission of one-day stays. I study hospital responses using two separate difference-in-differences estimation strategies, exploiting, first, the difference in price changes across diagnoses, and secondly, the difference in bed capacity across hospitals. Focusing on orthopedic patients, I find no evidence that hospitals respond to price changes, and capacity constraints do not appear to explain this finding. Results imply that the current payment policy yields little scope for policymakers to affect the health care spending and treatment choices.

Financial incentives and patient selection: Hospital physicians' views on cream skimming and economic management focus in Norway

This paper uses survey data to analyse physician views on the risk of cream skimming under a system with activity based financing (ABF) for hospital services. We used data from two nation-wide physician surveys. A survey undertaken in 2006 captures views following a large NPM-inspired structural reform in 2002. In contrast, a survey undertaken in 2016 captures views after a period of a higher degree of institutional and financial stability. We find that the majority of physicians believed that the 2002 reform both provided incentives for and led to more cream skimming. In 2016, however there is less consensus among physicians about the extent of cream skimming. Looking at different types of physicians we find some indications that physicians in leading positions are less likely to view cream skimming as a problem. However, there is concern that hospital management in general puts too much emphasis on economic issues.

Do hospitals respond to changing incentive structures? Evidence from Medicare's 2007 DRG restructuring

In 2007, the Centers for Medicare and Medicaid restructured the diagnosis related group (DRG) system by expanding the number of categories within a DRG to account for complications present within certain conditions. This change allows for differential reimbursement depending on the severity of the case. We examine whether this change incentivized hospitals to upcode patients as sicker to increase their reimbursements. Using the National Inpatient Survey data from HCUP from 2005 to 2010 and three methods to detect the presence of upcoding, our most conservative estimate is an additional three percent of reimbursement is attributable to upcoding. We find evidence of upcoding in government, non-profit, and for-profit hospitals. We find spillover effects of upcoding impacting not only Medicare payers, but also private insurance companies as well.

Opening the black box of diagnosis-related groups (DRGs): unpacking the technical remuneration structure of the Dutch DRG system

While we know that upcoding of diagnosis-related groups (DRGs) regularly occurs, we have little knowledge of the role of the technical features of coding systems in inducing coding behaviour. This paper presents methods for investigating the financial structure of the Dutch DRG system, and more in particular the grouper software, to gain such insight. The paper describes a system for investigating the robustness of the reward structure, by simulating the response of the DRG system to small changes in individual coding. The results from these analyses are used to visualise some data on coding behaviour, and to investigate how this behaviour is affected by incentives in the technical features of the DRG system. A number of technical weaknesses in the system are also identified.

Economic incentives and diagnostic coding in a public health care system

We analysed the association between economic incentives and diagnostic coding practice in the Norwegian public health care system. Data included 3,180,578 hospital discharges in Norway covering the period 1999-2008. For reimbursement purposes, all discharges are grouped in diagnosis-related groups (DRGs). We examined pairs of DRGs where the addition of one or more specific diagnoses places the patient in a complicated rather than an uncomplicated group, yielding higher reimbursement. The economic incentive was measured as the potential gain in income by coding a patient as complicated, and we analysed the association between this gain and the share of complicated discharges within the DRG pairs. Using multilevel linear regression modelling, we estimated both differences between hospitals for each DRG pair and changes within hospitals for each DRG pair over time. Over the whole period, a one-DRG-point difference in price was associated with an increased share of complicated discharges of 14.2 (95 % confidence interval [CI] 11.2-17.2) percentage points. However, a one-DRG-point change in prices between years was only associated with a 0.4 (95 % CI [Formula: see text] to 1.8) percentage point change of discharges into the most complicated diagnostic category. Although there was a strong increase in complicated discharges over time, this was not as closely related to price changes as expected.